The 2025 Nobel Prize in Economics (here) was awarded for having explained the role of innovation and Creative Destruction in Sustained Economic Growth. Particularly interesting (to me) was the Aghion and Hewitt paper A Model of Growth Through Creative Destruction, which won them part of the Prize. Does the 2025 Nobel Prize have anything to say about current French economic development and political instability?
I have two explicit models for technological change, one for Productivity change (TECHP) and another for Efficiency change (TECHE). The models are based on State Space indexes (see the Notes below) constructed using Principal Components Analysis (PCA). The Phase Space for the FR TECHE model is displayed above. The Phase Space for the FR TECHP model is displayed below.
Both models are cyclical and stable with periods of over a Century (see the Notes below).
Over time, in the graphic above, the two types of Technology peak at different points in France. TECHP peaks first followed by TECHE. I other words, when productivity gains are exhausted, technology improvement turns toward efficiency. The problem for France is that both measures of technological change are about to go into decline after 2025 and not predicted to recover until after 2100 (at least in the models).
From my models, at least, it does not appear that Technological change will intervene to save France from an impending Steady State Economy and possibly continued Political instability.
You can experiment yourself with the FRL20 TECH Models models and compare the outputs to the unstable Schumpeter Creative Destruction Model.
Notes
Blog Roll for FRL20 models and Theory Models:
Measurement Models
Modes
System Matrices
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